The telecom giant has benefited from surging wireless revenue, as more of its customers rely on smartphones. But AT&T has been falling further behind Verizon Wireless in the competition for wireless subscribers.

In the latest period, AT&T added 780,000 customers who signed long-term service contracts, up from 717,000 additions a year earlier and 151,000 in the third quarter. Verizon Wireless reported Tuesday that it added 2.1 million in new wireless contract customers in the fourth quarter.

At the end of December, AT&T had 70.5 million wireless contract customers, compared with Verizon’s 92.5 million. Verizon Wireless is a joint venture owned by Verizon Communications Inc.
VZ, +0.26%
and Vodafone Group PLC
VOD, +0.03%

Brisk demand for Apple Inc.’s
AAPL, -0.87%
iPhone has helped drive AT&T’s sales of smartphones. AT&T reported earlier that it sold a record 10.2 million smartphones in the latest quarter. The company said Thursday it activated 8.2 million iPhones during the period. For AT&T and other carriers, the sale of many smartphones includes a subsidy paid to handset makers to lower the retail price, locking in customers but creating a near-term hit to earnings and margins.

The latest quarter also included pension-related charges of roughly $9.99 billion. AT&T said earlier this month that it expected to record a $10 billion charge to fourth-quarter results, largely because of an accounting shift related to its pension and post-retirement benefit plans.

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(3:13)

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AT&T in November unveiled plans to spend $14 billion over the next three years to expand its wireless and wired network. The company is expanding plans for its next-generation LTE wireless network, and investing to grow its base of U-verse Internet and television subscribers.

For the fourth quarter, the company reported a loss of $3.86 billion, or 68 cents a share, compared with a year-earlier loss of $6.68 billion, or $1.12. Adjusted for pension charges, impacts from superstorm Sandy, and the sale of its Yellow Pages division in May, per-share earnings rose to 44 cents from 40 cents. Revenue rose 0.2% to $32.58 billion.

Analysts were expecting a per-share profit of 45 cents on revenue of $32.22 billion.

Total postpaid churn, or customers who cancel services, was 1.19%, compared with 1.21% a year earlier and 1.08% in the prior quarter.

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